Q4 2021 JinkoSolar Holding Co Ltd Earnings Call
Well, ladies and gentlemen, and thank you for standing by for Genco Solar holding company limited fourth quarter 'twenty to 'twenty One earnings conference call. At this time all participants are in listen only mode. After management's prepared remarks, there will be a question and answer session.
As a reminder, today's conference call is being recorded.
I would now like to turn the meeting for your high School today, Mrs. Dalloway, Inc. With Boneless Investor Relations. Please proceed.
Thank you operator, hi, everyone. Thank you for joining us today 14 coastal large fourth quarter 2021 earnings conference call. The company's results were released earlier today and are available on the company's IR website at Www Dot com.
Com as well as on Newswire services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website.
On the call today from single Solar Ami study agenda, Chairman of the board of Directors and Chief Executive Officer of Genco sold our holding company limited.
So Janet Yell, Chief marketing Officer of Genco Solar Company Limited Mesa, Patton, Chief Financial Officer of Gene cultural or holding company limited and Mr. Tallied Tal Chief Financial Officer, and cultural or company limited.
Mr. Kelly will discuss in coastal that stretched into the operations and the company highlights followed by Mr. Miao, who will talk about ourselves and the marketing and then Mr. Peng who will go through the financials.
I'll also that will all be available to answer your questions do you run into it on a session that follows.
Please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995, probably looking statements involve inherent risks and uncertainties as such our field trial results maybe materially different from.
The views expressed today further information regarding this and other risks is included eating post all of our public filings with the Securities and Exchange Commission.
Single solar does not assume any obligation to update any forward looking statements, except as required under applicable law.
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We were very pleased to close a very challenging 20 times to one. This excellent result, we were able to show basically response with flights in volatility and the logistic challenges that.
Two our competitive advantages in supply chain management, and a comprehensive advantages of our global and that's what.
Revenues and shipments grow significantly in the fourth quarter as a result of the increasing proportion of the E House lopsided production capacity and the large size of product so our integrate to their cost declined it further and our profitability further improved.
Of course, all the operating profits quadrupled and a non-GAAP net profit increased the by.
Approximately 13 times.
In the first quarter of 2022 our principal operating subsidiary don't Sprinkle completed its listing on the Shanghai Stock Exchange Science and technology Innovation Board the capital ratio, there's a problem.
Providing greater momentum for the development of our state of the art technology in the business.
Our ability to successfully compete in the future that's all our comprehensive strengths.
Welcome to you to increase our competitiveness in technology global market and that's what and also a comprehensive management skills.
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Despite a challenging 2021, the demand from and you'll just kept increasing compared with 22020 more flexible business model and a lower price sensitivity are helping that distributed generation business achieved rapid growth.
China's installation capacity rates the 55 gigawatts for the full year of 2021 with D. J country of building more than half of new installations due to a higher economic return.
If we.
I hope this trend to remain the driving force for newly added installations in 'twenty 'twenty. Two we are highly optimistic about the development probes box and it's the ability to generation markets and we continue to grow our brand influence in this market.
That's the strategic need for energy transformation and energy security in major World economies, we expect the P. P. The industry to continue its strong growth momentum in a comedy is.
And the high efficiency N type products will support the continued growth of the global PV industry.
Okay.
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They continue to lead the industry, there's our analyst chip technology and in depth market knowledge.
We're hanging facility our mass produced the N type cell reached an ultra high conversion efficiency of up to 24 up one 5% in the fourth quarter of last year and it yields similar to that of the part we have roughly 16 gigawatts of N type cell capacity operational in the first quarter.
Out of the 'twenty to 'twenty, two and the kinds of late are steadily ramping up our production capella.
Okay.
The integration costs.
As expected to further decrease as our integrated production capacity structure consistently improve.
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In light of the rapid industry transition from a P type two and type and the growing demand for higher efficiency products.
Have launched the next generation of N type of outright if they should stay type of new module. This module have reshaped our world wide claim from other customers for better power generation performance and upturns that premium is a lot wrong, our stable supply and localize the after sales service not to work well.
Continue to guarantee the reliability and the consistency of our products and services.
This core qualities have become although our competitive moat, we won't right ankle the leadership position of our N type modules globally and further enhance our global market share and the profit ability.
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Yes.
Over seven Gigawatts mono wafer plant, even them become officially operational in the fourth quarter in the first of course the base yet this integrated the mono wafer cell and module manufacturing capacity of roughly seven Gigawatts oversize further consolidates, our global supply chain advantage without quad.
Quad in 18 days, our upstream and downstream partners to tap into all other complementary resources and in house to our strategic cooperation.
This will help us mitigate raw material shortages and production weak links.
Same time, we are committed to building a cluster of industrial alcohol systems to solidify of a supply chain vertical integration is essential to compete in the global PV market by continuous continuously consolidated our diversified industrial industrial chain.
Infrastructure, we believe we will continue to strengthen the competitiveness of our core products and to bring greater threat being bring great value to our global customers, but it's a high quality reliable modules and the premium services.
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Before turning it over to Jennifer I would like to go over our guidance for the first quarter and the full year 'twenty 'twenty. Two we expect the total shipments to be in the wrench almost seven five to eight gigawatt for the first quarter of 2022 .
Our mono wafer solar cells and solar module production capacity is expected to reach 54 days and the six to eight gigawatts, respectively by the end of 2022 .
We expect our full year 2022 shipments, including wafer cells and modules to be in the ranked all but such five to 40 gigawatts.
Okay.
Thank you Mr. Li.
Total shipments in the fourth quarter were $9, seven kilo of which larger shipments or Nike to work.
The increase compared with the third quarter of 2021, Thank you everybody.
Yes.
North America improved sequentially, thanks to the south of high efficiency products high end market.
In terms of regions larger shipments in Asia Pacific and emerging markets increased.
The year over year.
China outpaced all other countries by contributing the largest proportion in the fourth quarter from less than 10% in the first half of the year to nearly 34%.
As distributed generation Gratulate becomes the main driving force towards newly added installations in China.
Sector is expected to increasingly contribute to any incremental market wallet.
Encouraged by incentives from the one plus and policy framework countries climate action and action plan on peak emissions and other policies.
We are optimistic about China demand.
See the 100 Gigawatts in 2022.
We expect that the shipments in China market to a further increase in the 2022.
In Europe , one of the most developed of PV market clients have accumulated of matured awareness for PV and have a higher acceptance of new products, such as hydro new modules.
By end of 2021, we had shipped our products to more than 30 countries across Europe .
Europe become one of our top country builders to put total shipments in 2021.
With increasing electricity prices, making a dollar and a few more economical.
Terrific necessary Ritchie of energy transformation and energy security.
Europe is expected to maintain strong growth momentum.
We are confident in maintaining our competitiveness in European market by leveraging our local local network and the next generation type of ultra efficiency module with Tiger.
Okay.
We launched our next generation type Tiger module in the fourth quarter of 2021.
And then the increased global promotion and the sales Dilip.
Delivering high energy.
Hi, beneficial factor and the lower degradation.
Degradation.
New module, bringing clients better power generation performance and the opportunity to competitive premium.
Meanwhile, we are heavily invested in the future of distributed generation sector.
The propulsion.
The generation of our shipment is expected to reach around a 40% this year.
We will continue to explore the global market demand for distributed generation based on market trends and customer needs.
And to proactively increase our presence in China, United States, Europe , Brazil, Australia, and explore other potential market.
Countries around the world have adopted various a strategy in response to COVID-19 supply chain disruptions and the soaring household gas electricity Bill.
The energy crisis.
Under this backdrop the global PV market has been driving high grade low carbon and the long term energy security investments.
Which will usher in a new period of rapid development.
Market demand in 2023 is expected to grow in excess of 20%.
We will continue to attract market conditions and adjust our business strategy accordingly.
We are confident that we will contribute to the global LNG transformation with our high efficiency products and support our customers with our sound marketing and global service network.
With that I will turn it over to Pat.
Thank you Jennifer.
Our fourth quarter results include the expectation.
Total revenue grew significantly quarter over quarter.
We continued.
Leslie to take effective management of integrated production cost and.
And operating expenses.
Sequentially.
Gross profit doubled.
Operating profit more than quadrupled.
non-GAAP .
Net profit increased by 13 times.
Operating efficiency improved as a result of our efforts to closely align inventory Benjamin with market supply and demand dynamics.
Let me go into more details now.
Although revenue was two point.
Seven.
Sterling had increased.
Okay.
19, one percentage sequentially and 774% year over year.
Gross margin was 16.1 percentage compared with 15 one percentage.
In the third quarter.
Ear and 16% in the fourth quarter last year.
Excluding antidumping and countervailing due dates reversal benefit gross margin was 14.3 percentage.
Although operating expenses nearly doubled year over year due to a substantial.
Substantial increase in module shipments during the fourth quarter.
Which increased shipping costs.
On one hand, we increased shipments to China to reduce the impact of shipping cost and profitability.
And on the other hand, we leverage our long term agreement.
Major shipping companies.
To obtain more competitive pricing compared with the rest of the market.
In general.
The impact from changes in shipping costs.
Profitability was relatively under control.
Total operating expenses accounted for 13 percentage of total revenues in the fourth quarter.
This ear.
Flat sequentially and likely improve to compare.
15 percentage in the fourth quarter last year.
Operating margin.
What percentage in the fourth quarter.
801, compared with one point percentage in the third quarter.
And.
0.8 percentage in the fourth quarter last year.
EBITDA was 483 million doubled compared ways.
89 million in the third quarter of 'twenty to 'twenty one.
non-GAAP net income was.
34 million, an increase of searching time sequentially, resulting in diluted earnings per 88 of.
Six days seven cents.
A brief you on our 2021 full year financial results.
Total module shipments were 20.
2.2 gigawatt.
Up 18% year over year.
Total revenues or six point.
For the one building.
Up 16 point to year over year.
Increase in module shipments hiring degree production volumes together with cost reduction from our industry, leading integrated cost structure.
The result in improved profitability.
For the full year Austin did something wrong gross profit.
There's about $1 billion an increase of.
About 8% year over year gross margin was $16 three compared waste.
$17 six percentage last year.
Operating margin for the full year all of a sudden did something wrong was 2.7 percentage compared to $5 one percentage in 2020.
Operating expenses were $13 six of the total revenues in 2020 , one compared to <unk> five percentage last year.
EBITDA was 538 meeting in 2021 compared to <unk>.
416.
$63 5 million last year.
non-GAAP net income.
It was about <unk>.
88 million in 'twenty or 'twenty, one compared to a Henry.
47 million last year.
This translates into non-GAAP basic and diluted earnings per ADR.
One point.
84, and $1 seven respectively.
Moving to the balance sheet.
At the end of the fourth quarter, our cash and cash equivalents.
We're one point fulfilling up from one point 14 billing at the end of the third quarter.
And the one point.
24 billion at the end of the fourth quarter last year.
Our operating efficiency continues to improve quarter over quarter.
The number of days.
Two days in the fourth quarter compared with 65 days in the third quarter of transition do well.
Inventory turnover days reduced to 88 days in the fourth quarter compared with Henry to 71 days in the third quarter of 2021 .
Okay.
Full bidding at the end of the fourth quarter compared to 8 billion at the end of fourth quarter last year.
Dave towards two point 56 billion compared to $1 56 billion at the end of the fourth quarter last year.
With the listing of jealousy Genco earlier this year.
Our financing structures, but expect to improve with access to competitive financing.
This concludes my.
Prepared remarks.
We're now happy to take your questions.
Operator. Please proceed.
Thank you.
If you do talk to a question. Please press zero one on your telephone.
Euro two two council.
Our first question comes from Brian Lee with Goldman Sachs. Please go ahead.
Hey, guys. Thanks for taking the questions.
I guess.
Maybe just to start off on the guidance I appreciate you, giving the the views for ship.
Shipments here in Q1 and for the full year I think it customarily you've given gross margin guidance for the year per se, but at least for the quarter.
Any reason I might have missed this but did you provide the gross margin guidance and revenue guidance for Q1, and if not kind of whats.
[noise] rationale and I guess, what are the puts and takes around the.
Outlook for those.
Those metrics in Q1.
Yeah.
And Brian This is Harley speaking and Oh go.
You know in terms of guidance, we make some small changes compared to you know.
Hello.
The quarters before.
We we tend to only gave the guidance for the citizens.
And in terms of gross margin.
And.
Firstly, we want to be consistent no go sandwich subsidiaries in China has been in this disease.
Chinese capital markets. So we want to mentioned that consistency.
Uh huh.
Patients in China, which introduced did not provide any.
Gross margin guidance. So as we are assisting them in Orange second one is in terms of gross margin because.
You know the supply.
It's so volatile and we don't believe it's a.
No.
At this stage to give a good novel no.
You know the gross margin range is still your tonnage.
Okay. That's fair enough, maybe maybe out of a big picture level.
Gross margins came in sort of right above the high end of the range for <unk>. So kudos to you for good execution on that are you, saying that the.
The supply chain slash margin environment is more uncertain than Q1 2022, then what you saw in Q4 'twenty one.
Hmm.
You know the.
The party is still you know the polysilicon price is still well above our expectations. So.
Terms of gross margin and we expect some you know.
Pressures from that perspective.
The long term perspective, we think even ponder.
We all return too.
No more rational level, particularly.
It was the most upon so production volume from all the producers in the second half of year.
Okay Fair enough and then.
For.
Q4.
There was a good amount of non module shipments what was your kind of gross margin Delta.
Roughly between modules and non modules, where they same ranger.
Higher on the non modules and if higher what what sort of.
Percentage or basis points difference.
Uh huh.
You mean, the Q4 last year or two where I'm sure you're asking about Q4, and then I guess the follow up to that would be whats embedded in your shipment guidance for 'twenty two in Q1 in terms of.
Wafer and non module versus module okay.
The for the tow Nintendo to the guidance for Q1 is where are your full year. The majority of your part is the module.
You can take that.
At the module shipments.
Regarding the Q4 last year.
Do you have some you know the 600 megawatts.
For the wafer and sale no humans.
For the low frequency no wafer sales so the margins were low.
Thank you.
Excluding the wafer and cell margins.
Module margins will be a little bit.
Better than that.
The total amount.
Okay. That's great last two housekeeping ones and then I'll get back in the queue.
The Capex guidance for 2022 months I might've missed it but do you have a capex range or number for this year and then I noticed the tax expense was much higher than usual in Q4.
What was the driver of that and should we be modeling a similar tax rate in 2022. It seems like it was high 20% sort of close to 30% in Q4.
Thank you.
Yeah, you know the company.
Yeah.
Yeah. This is Pat.
Please go ahead.
Yeah first capex for.
Last year from day to day, one and is approximately 1.3 billion U S dollars.
We expect that our new capacity in this ear so it might be in the around the one eight to $1 9 billion in U S dollars.
Yeah.
And just lastly on the tax rate.
Yeah the tax rate.
No it's in the range of 15% to 20%.
Okay. Thanks, guys I'll pass it on.
Thank you.
Our next question comes from Philip Shen with Roth Capital. Please go ahead.
Hi, everyone and thanks for taking my questions just wanted to revisit the margin question for Q1, they're just three days left in the quarter. So you guys probably have a sense for where margins are.
What do you think could still drive.
Change.
Hum.
Material kind of impact versus your view given how late in the quarter. We are and what do you think can you give us a sense for how do you think do you expect margins in Q1 to be flat versus Q4 or potentially weaker as a result of the higher <unk>.
Thanks.
Ooh.
Yeah.
No.
In terms of margin per.
First quarter I assume that's roughly.
<unk> be flat quarter over quarter, and maybe slightly lower because of the polysilicon price.
And and.
In Israel as you know the on the nose.
The appreciation standards, particularly in.
January and February .
Okay. Thanks, Charlie.
And shifting back to some comments.
Thank Jenner made about Europe .
The demand there I was wondering if you could provide a little bit more color on how demand has changed over the past four weeks to the European market.
You know do you also serve the European market from your Southeast Asia facilities.
Any kind of.
Color there would be really helpful. Thanks.
Thank you.
This is Chuck.
The global demand out of 'twenty two.
I'm pretty optimistic about the global demand, especially what happened in the last three.
Three or four weeks time in Europe , we have observed quiet.
Let's say, we're all deserve a stronger than expected demand.
Coming from Europe , plus the.
Russia, India, and all sorts of reasons.
Yes.
The recent drop pushup from China, sorry, So are you.
Adding everything together, we are looking at the slope of the mountain at the range of around 246 to 150 gigawatt rich and of course regarding Europe .
Believe European market. It will we'll beat 30 gigawatts of pretty soon.
As a whole and the currently we we still supply European market from China manufacturing base, our non China affect your birthday, so many dollars HFC or U S market right now.
Hope that answer your question.
Yes, that's good.
Thank you.
As it relates to the capacity expansion.
I think.
Last quarter, you guys were expecting wafer cell and module to be 40 to 40, and 50, gigawatts, respectively, and now you're expecting it to be $50 40 and 60.
And so wanted to.
See if you could help.
Help us understand what drove that I mean, what's driving that meaningful.
Increase in capacity.
It seems like it could be related to the stronger demand.
But was wondering if you might be well share more there and then can you talk about you know if you expect.
'twenty two to be.
You know call it.
35 to 40 Gigawatts.
How much of that is booked already for the year.
You know you often have bookings well in advance and so do you think that's 50% booked or possibly even more thanks.
Okay.
So I think Oh, let me briefly talking about.
Talking about this topic.
The capacity expansion, yes, we have seen a strong stronger than expected demand, but mainly we were holding the confidence about the long term momentum off the stronger global demand and that's very important and the reason why we are one of the important reasons why we expand our capacity. Meanwhile.
We are you know.
Notice that the loss of capacity will released in the second half.
Bye.
No help.
Our to meet that demand and not only in 'twenty, two but also in 'twenty three and beyond.
24, you bet.
And also for the booking side I think we are looking at our bookings.
More or less around half bookings are based on our plan and we are trying to build more and very important note here is that we are seeing.
Nathan.
Stronger than expected demand for the type curve.
That's I think the key highlights we trying to expand our capacity, but focus will.
Only be the expansion on the N type product.
Thank you.
Great. Thanks, One last question for me as it relates to the shipments.
From Vietnam, and South East Asia into the U S have you guys been able to.
Getting new volume of shipments into the U S I think.
You guys have non China poly.
Going into modules and if so.
When do you expect those shipments to arrive at U S shores without.
Being impacted by the host Shawn Duffy our own thanks.
Okay.
For that I think we have seen some positive.
Feedbacks.
A couple of weeks.
We have seen some smaller walden.
That's quite as Campos being accepted.
Pass through with the CCP inspection.
And we are expecting.
We're expecting you know.
To beauty.
Trust divorce, the tracking system to make sure that the all the shipments going to U S market it will be fully compliant with the CPP.
The Aro requirements. So we saw as we relaunch or we are we started our non China production.
I think in the last 10 months on two or two and back to your question, we haven't got any massive.
The 100 megawatt level of shipment arrival in U S border, yet, but but we still hold to that.
Positive views about our.
Future shipments to U S market.
For sure there are still some concerns on this recently.
Hitting about this.
And two commercial stuff, but we will keep a close eye on it but in general I think we are we have one of the best solutions in the industry with our vertical integrate data non China production basis.
Yeah.
Okay, Alright, thank you very much Jenny I'll pass it on.
Thank you Joe.
Our next question comes from Island now with Jefferies. Please go ahead.
Thanks, a lot for the management.
The holding of the meeting and congratulations on the good results. So my first question is about the new popcorn product so.
But on a per watt basis, what do you expect the premium popcorn products unless it's tough.
Yeah.
Yeah.
Thank you for your question. This is generally speaking and regarding the premium is hard to justify.
I know a number of vessels we are building the business on the business model based on you know.
Profit sharing physical product with our customer.
In some cases, we might share we might have got a bigger premium in some cases, we might get a smaller premium.
Based on different markets different the radiation condition.
System, designing or you know et cetera, so he's various allowed by the in general we are.
We are seeing you know the N type premium.
In the current stage, we have seen anti premiums stay.
Around two to three <unk>, but we expect that that may become up and down a little sore, but.
We still are pretty optimistic about this.
<unk> the expected demand about the type curve. Thank you.
So it's around two to three Samsung I wonder in terms of the margin with.
Would this be better compared to the prep products.
You know this is Tom speaking for sure you know.
The you know the Newport out in time, we think there's a price premium.
Well you know they don't come to.
On the progress to run parallel capacities to make the you know the cost integrated production costs and it is competitive with traditional PERC product.
Thank you.
The next question that.
Relates to the European market, because they were ambitious.
Installation.
Pockets with the Repowering initiatives et cetera, but at the same time our action.
Second piece of it so meaning that probably being more judicious.
Module practices tweets sent to them so I wonder if.
Yes.
Still strong demand for the European market in the second quarter versus the first quarter.
Quarter over quarter growth.
Hi.
Generally higher module prices.
Sure.
Oh, Okay. This is China and take this one the European demand that you saw stronger than expected, especially in the recent three four weeks' time.
We are we have few of the stronger than expected that the amount of mainly coming from this.
Not only from the distributed generation market segment, but also coming from the utility side as well.
But we are we have seen you know quite a several let's say halfway around the stronger demand from Europe , one of the challenge.
Mission by U S currency exchange rate.
Other challenges like because the logistics costs, you know the shifting costs continue to cutting up which is.
And a big impact.
Factors and as well as you know.
The cost of raw material like us.
Brian I'd say truck.
But having said that you know because the local electricity cost.
Hi, Hi.
Here, So we can expect there either.
Slightly higher than expected at the module or source system costs.
The solar system also right, you'll actually be from solar system is one of the most competitive electricity.
Contributors across the whole Europe I think we are still that's the reason why we are holding a very big confidence on the European demand that not only for the next coming quarters, but also for the next coming three or even five years.
Hi.
Is that answer your question.
Yes.
They'll comprehensive thanks a lot.
Yeah.
Thanks for thanks for management.
As I finished my questions. Thanks, a lot.
Thank you.
Reminder, to ask a question. Please press <unk> one on your telephone keypad.
Our next question comes from Roger read with some sorrow capital. Please go ahead.
Good morning, and first of all I want to congratulate you on an amazing fourth quarter as well as on a very successful IPO.
Those are game changers for Genco solar going forward.
The question I wanted to ask you I have several questions.
First question is about the operating expenses.
Noted that the the big change from quarter to quarter in the operating expenses, which was.
Almost a $100 million.
It was because of tripling expenses and yet when I look at the line items. The DNA went up $60 million in Q3 $222 million in Q4.
So is there any stripping expense included in the G&A or what is the can you just explain why G&A went up so much and what the components out of that and how sustainable that is on a go forward basis, because G&A has been trending at $50 million to $60 million for several quarters now.
All of a sudden it has jumped up.
100% in one quarter. So that's my that's my first question.
Oh.
Hello.
Operator, I cannot hear anything.
Hello. This is Tony speaking when the news regarding the you know the some of the G&A.
G&A expenses it's.
It's a little.
Because you know.
The increase so far.
<unk> score is particularly as you know some G&A expenses.
The aim to empower even though you're in bonus.
As we have.
Incur additional.
<unk> expenses.
And expenses relating to the Macy's.
Company investing so it's a it's no.
Some of the partners are nonrecurring and.
Looking I think most importantly is looking to that as soon as we need to.
We we plan significant increases revenue shipments.
240, Gigawatts, which is 25 gigawatts.
In terms of operating expenses.
Including everything you know when you think it's.
We are going to.
<unk> benefited from the.
Beverage that was the large scale and the operating expenses versus the <unk>.
The total revenue will continue to.
To trump quarter by quarter.
Yeah.
So absent the employee bonuses.
Say that at least in the first few quarters of the year.
Being able to drop back to the $50 million range.
And then they're probably bonus was taken at the end of the year right.
No. It's a major part as you know.
Uh huh.
And of course, the mental powers the majority of our partners. So the IPO expenses, whereas the legal expenses.
No. We are doing I know you know.
Legal related work, particularly for example, with the W. O U S.
Right on the litigation.
Patent.
For the year end bonus so we did not accrue quarter by quarter on that.
Because we have better performance.
In the fourth quarter.
So the employee bonuses.
Bonuses.
Higher in the fourth quarter, because it's been passed down to the better than expected.
Performance.
Okay.
My next question is about the shipping costs.
Are you at this point you know it has become very clear that discipline cost will stay higher for longer.
It was originally thought maybe a year ago are you having any success in Boston, the shipping cost and scope changes in shipping costs to the final consumer or youre still having to swallow that cost and the volatility by ourselves.
Sure sure.
You know shipping costs.
If the shipping cost works when you go to be too high.
High level surrounds the 20th dwindle.
So when you're doing it too you know.
And but we've given you know the <unk>.
Sure you know energy is very competitive and although you know markets are.
A highly demanding.
Don as solar modules.
So we are we are seeing you know flexibility is no problem with that.
The customer acceptance towards the higher module price, including the shipping cost. So we you know based on our experience with customers.
Similarly, we are able to.
Pass through the majority of pardon me.
The shipping costs are our customers.
Yeah.
So so sorry.
Looking out at.
Two one is almost over Q.
Q2 and beyond.
It's clear that at least for now polysilicon costs have also been higher in May.
Hey, higher for longer.
Especially in the second quarter does that mean that.
That module prices will continue to go up.
Would you say that module prices in Q1 were higher than Q4, and Q2 there'll be higher than Q1.
Mhm last year in Q4, you know them you.
You know the module price market price is reaching to extremely high.
Most over you know what I'm seeing in arm B T. Some cases.
No lower a little bit first quarter, but given the high polysilicon price, particularly in the first half for you, but I'm expecting you know strong demands on the relatively is shortage of polysilicon.
We are expecting with the you know the.
The module price well relative stable I may have upwards pressure, but second half year.
Given more I'm thinking of the polysilicon supply.
Relatively you know.
We're optimistic for the you know.
The downward trend for the polysilicon.
But I, but are you, giving yourself some pricing flexibility in the way you are writing your long term contract so NK.
Silicon prices stay higher for longer Youre, not squeezed by that.
Yeah.
Ooh.
Well, we have different arrangements you know, it's kind of our customers some of the customers that the module prices. They have some kind of linkage where the spot market is upon us tokens some of them some of our contracts.
Fixed.
But the ones that how variable are those going up as a as a percent of total contracts.
Excuse me to speak with you.
Yes.
The number of contracts where.
The module pricing is variable based on the spot price of polysilicon is that kind of contract gaining in popularity right now.
Yeah.
I, just depending on different regions different customers. So it's a no.
It is.
It's consciously but some.
Some customers that like to you know based on their estimation.
More per semester.
Mistake optimistic for the polysilicon plants. So there's some more customers more confidence you know on the projections. So polysilicon prices may remain you know like to have to worry about arrangements with us.
Okay and a final question is on the on the N type of you mentioned that you have about 16 gigawatts of N type of operational right now, but you also mentioned that the target for our.
Capacity for N type cells at the end of 'twenty. Two is also 16 gigawatts. So.
I don't understand you are not increasing the N type cell capacity at all this year.
60.
16 Gigawatts.
You're assisting gigawatts at screening online you know in your first quarter.
The ramping up stage. So by the end of this year, we didn't have plan so far to increase our game. So that is no.
In time.
16, gigawatts its new airports in the 'twenty two that's it's really you know first quarter. So.
That is why you know when we gave the guidance.
The year.
Capacities <unk> Qunar gigawatts.
So it's a good thing right now it does not four gigawatts of quarter.
Yeah.
So far and then maybe expand as well.
We've got 16, Gigawatts type no top com sell capacity online in the first quarter the.
16, gigawatts of annual capacity and its ramping up stage and we expect to the capacity will reach to full capacity, but I was thinking about it in the second quarter.
So you know so far we have already get you know 16 gigawatt capacity.
For the N type.
So so what.
But the goal for the end of the year is also 16 Gigawatts and type the 40 out of the 40 gigawatts cell capacity.
The target is only 16, gigawatts and died or.
Did I read that wrong.
Youre right Youre right because by the end of last year, we have.
We have only I think.
Number four gigawatts cell capacity.
Additional new 16, Gigawatts this year, so get total number 40 gigawatts.
Yeah.
Okay I'll pick it up later Charlie Thank you.
Congratulations again, thank you.
[laughter].
Our next question comes from Tony <unk> with Bank of China. Please go ahead.
Hi, Thanks management. Thanks paradigm. This is Pedro here with you I have two.
Two questions first one is also a follow up on the N type products. So I understand the new clients are still ramping up and you may not have the final cut out right but.
But maybe can you speak of.
They kind of by design.
U N type products that wafer ends there are they compared to the breakfast show they consume that party.
So anytime you put your question regarding the intangibles upon on what you mean.
Yes.
The wafer I must say I was there a thickness are there things that could get to their modules. So they can see them kind of best polysilicon, so that it will happen in golf.
Production cost site.
Yes.
Yes, you're right.
We have the wound as you know for the N type of not only the top concept solar cell production.
As we all know.
Doing the wafer.
Modules was entitled wafer, it's a it's a hub.
Or the walnuts, both you know.
No no the vapor right compared to the P type and do.
We think it's a it's going to from the no.
I think that perspective.
Uh huh.
Where are you for it could give some advantage from that.
From the consumption and less consumption was upon us Senator.
Got it. So you just said you are not going to add.
Hi.
That's about capacity this year, so in the coming quarters and you can see the premium.
So do you think do you continue to invest in the future.
Got it.
Pizza hut.
Yourself.
Please.
No for the next stage capacity expansion plan, we are still you round the aging I don't know if we will.
Let's say, if we ran to invest additional more you know, let's say solar cell capacities.
It's 100%, it's a top talent in time you know.
Capacity at this stage.
Whereas we are still in the evaluation stage.
Okay got it. Thanks. So my last question answer I'm going to a product mix. So last year I guess your DG shipment should be around 30% to 35% of a total market shipment. So in this year do you think the share of D. G products should be higher than last year and how does it have to have margins because some of the new did you.
These sales should be coming from China market.
Do you see higher or maybe still shopping if that was expense.
All my questions.
I think in your prepared remarks, but sooner and we mentioned the D D.
Flu will increase around 40% or is this sort of two 5%.
And it's a well known well.
We will focus not only in oversea market.
China DG markets.
Okay. So do you think the T G I.
Kind of in the marketing side do you think the DG prototypes higher than their greatest skill perfect.
Topical <unk>.
Hello.
You know the customer.
It is for the clients are small.
No.
Hum.
We expect to get more.
Higher margin from the <unk> perspective.
Okay. Thanks, a lot Charlie that's all from me.
Okay.
Thank you.
This is the end of today's call. Thank you all for participating you may now disconnect your lines.
Okay.
[music].